Zambia Food and Drink Report Q1 2013

The outlook for private consumption remains quite strong. Our Africa team is forecasting real GDP growth of 7.1% in 2013, among the fastest in the world and a considerable improvement over 2011 and 2012, when we estimate that growth was 6.5% and 7.0% respectively. This is likely to provide a strong impetus to food and drink spending, with Zambia continuing to be one of the region’s most attractive investment destinations.

Key Forecasts ?? Total food consumption growth (local currency) in 2013: 7.5%. Compound annual growth rate to 2017: 8.9%. ?? Mass grocery retail sales growth in 2013: 11.6%. Compound annual growth to 2017: 12.7%.

Key Trends Organised Retailing: All Southern Africa markets lag regional leader South Africa in terms of the presence of organised grocery retailing. Across the region, formalisation will be a key driver of mass grocery retail sales growth, as more and more shoppers trade up to organised retail channels. This will be true even for the region’s more mature markets; however, we also expect the steady introduction of new store offerings, such as non-food products, to help to support growth. In Zambia, we estimate that only around 10% of grocery retail sales are accounted for by the organised sector and this provides strong room for growth.

Beverage Sector Growth: We expect to see strong beverage sales growth throughout the region over our forecast period to 2017 and beyond. There is enormous potential in beer and soft drinks, specifically carbonates, at this stage of the region’s development. Throughout the region the beer market is already keenly contested, and this level of competition will lead to significant new investment over our forecast period, driving strong sector growth. At an estimated 8mn litres per annum, Zambia’s beer consumption levels remain low by regional standards and this provides enormous potential for sales growth. Demographic Appeal: Demographics are a key component of the region’s appeal given the very low base from which most growth is occurring and the severe income inequalities that still persist. Zambia’s population dynamics are a major plus point for investors. The country’s already fairly attractive 13.5mnstrong population base (as of 2011) will grow to 17.9mn by 2020 and at an incredible rate of more than 200% over our entire forecast period, to stand at 45mn in 2050. Most notable is the age profile of the population – in 2012, 57% of Zambia’s population was expected to be younger than 20, and this provides immense long-term growth opportunities for regional investors.

Risk/Reward Ratings: Zambia falls in an impressive sixth place out of 13 regional markets that are ranked for Sub-Saharan Africa within BMI’s Food & Drink Risk/Reward Ratings. The country comes in just below the regional average in terms of rewards – an illustration of the very low existing spending levels and the very low base from which growth is forecast to occur. However, it scores above the regional average in terms of risk. Overall, Zambia ranks just above the Sub-Saharan Africa average in our regional ratings.

Table of contents

Chapter 1 - BMI Industry View

Chapter 2 - Business Environment

BMI’s Core Global Industry Views

Table: Core Views

Sub-Saharan Africa Risk/Reward Ratings

Table: Sub-Saharan Africa Q Food & Drink Risk/Reward Ratings

Macroeconomic Outlook

Table: Economic Activity

Chapter 3 - Industry Forecast

Food, Mass Grocery Retail

Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts, -

Mass Grocery Retail

Table: Mass Grocery Retail Sales – Historical Data & Forecasts, -

Chapter 4 - Market Overview

Southern Africa: A Great Opportunity For Multinationals

SABMiller’s Sechaba Breweries: SSA’s Most Efficient Beer Company?

Chapter 5 - Demographic Outlook

Table: Zambia – Population By Age Group,-

Table: Zambia – Population By Age Group,-

Table: Zambia – Key Population Ratios,-

Table: Zambia – Rural and Urban Population,-

Chapter 6 - Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter 7 - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter 8 - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

Related research categories

By sector: General drinks

By market: Zambia (in Africa)